Fines for Violations to Environmental Laws in Mexico will Likely Increase Substantially

On September 27, 2017, the Mexican Senate passed a bill that amended Mexico’s main environmental law, the General Ecological Balance and Environmental Protection Law, in force since 1988 (the “General Law”), as well as other related provisions. We expect the Chamber of Deputies to approve this same bill during the current legislative period.

One of the most relevant amendments deals with fines for environmental violations. These will increase substantially. Currently, the maximum fine that may be imposed is equivalent to 50,000 times an UMA (measurement and updating unit), which amounts to $4,050,000.00 pesos Mex Cy (around $225,000.00 dollars). The new maximum fine amount will be 7.5 million times an UMA, which will be roughly equal to $566,175,000.00 pesos (approximately $31 million dollars).

Companies will be liable for any environmental harm caused by their legal representatives, directors, managers, officers or any other employee having responsibility over their day to day operations , if they are negligent or if they willfully carry any act that causes environmental harm or violates a law, regulation or standard.

Individuals that cause environmental harm, or that through their actions breach an environmental requirement, may also be subject to fines ranging from 300 to 50,000 UMAs.

Other interesting aspects of the bill are the following:

  • When conducting regulatory inspections, environmental agencies must apply the presumption of innocence principle; the burden of proof regarding acts or omissions that may cause environmental harm or that may violate laws or regulations will shift to regulatory agencies;
  • If two months have passed since the date of an inspection and the inspected party has not been notified of a document detailing the alleged violations detected during the inspection, the entire procedure will lapse becoming null and void.
  • Agencies will have the power to order the demolition of buildings or installations if they failed to secure a prior environmental impact permit.
  • New rules will be introduced for conducting regulatory inspections, simplifying and consolidating in one single inspection the procedures contained in several environmental laws dealing with wastes, forest development, national assets, biosafety, wildlife and climate change, as well as guidelines for administrative procedures which will become more in tune with the Federal Environmental Liability Law.
  • New criteria on how companies may be liable for environmental harm will also be introduced, as well as new guidelines on how to submit complaints against parties that cause or that may cause environmental harm.

Once the bill is approved, it will become effective 6 months after it is published in the Official Federal Gazette.

Because of the substantial increases in fines for environmental violations and the introduction of new penalties and remediation obligations, now more than ever it will be important for industrial sites to conduct a thorough review of their environmental performance, prior to facing regulatory inspections and facing penalties.

How can we help?

Our environmental practice group has the legal expertise to identify legal risks and to propose and implement strategies to correct them. We are considered one of the premier environmental practices in Mexico by Chambers & Partners and by the Legal 500 and have the ability and resources to assist your company in avoiding environmental liability. We regularly conduct risk assessments that provide useful compliance mechanisms and tools. We are ready to help you navigate through the sometimes complex framework of environmental compliance obligations.

We will let you know once the amendments to the General Law become effective.

____

For further information, please contact Federico Ruanova-Guinea and Mario Facio-Salazar:

Federico.Ruanova-Guinea@bakermckenzie.com

+5216646289185

mario.facio-salazar@bakermckenzie.com

+525552792969

Federico Ruanova-Guinea has been practicing law since 1988, and is currently the coordinator of the Firm’s environmental and natural resources practice group in Mexico. He practices mainly in the areas of environment and climate change law, with emphasis on environmental impact and risk, as well as the prevention, risks and control of air, water and soil pollution. His practice also covers hazardous substance management, occupational health and safety issues, as well as carbon trading and administrative litigation. Mr. Ruanova-Guinea is a member of the National Association of Corporate Attorneys of Mexico.
Mario Facio is a member of the Firm’s Environmental Practice Group in Mexico City. He has participated in multiple corporate and real estate projects, often advising on the regulatory component of such transactions. Mr. Facio was an active participant in the Fourth Annual International Arbitration Moot “Willem C. Bis,” which was held at the Juridicum of the Pace University in Vienna. He is a member of the Environmental Law Committee of the Mexican Company Lawyers Association.